Questions for first time home buyer

admdruso · Joined: 06 May 2009 Posts: 1

Hi, and thanks in advance for the help.

My question I hope turns out to be fairly simple.

My brother wants to help me buy my first house, either by helping me with the down payment, or buying the house with me as partners. I would be the one living in the house, he would be buying it as an investment. He would make an initial investment, and I would have a loan, and would be making the mortgage payments. We would split the appreciation if we ever decided to sell.

If he were to buy the house with me, he wants to set it up under a partnership LLC, where I would rent the house from the LLC. My concerns with doing this are 1) I would be still paying rent as opposed to a mortgage, 2) I would be losing out on the intereste / tax write offs because the LLC would deduct those prior to posting its profit / loss, 3) I would lose the first time home buyers tax credit, 4) The money that I pay in rent could potentially be doube taxed income to me (Taxed when I earn it from my employer, and taxed again as I earn it from rental income), 5) There would be limited means for me to increase my equity in the house.

So my questions are 1) am I right in thinking this way, 2) is there a better way to structure a partnership where 1 partner can still claim the FTHB credit, and get the interest write offs, and build equity in the property?

Please help me

Thanks

m2c · Joined: 03 Aug 2005 Posts: 937

LLCs are generally persona non grata in secondary-market mortgages. Borrowers typically must be “natural persons” of legal age to contract. It can be stretched to inter vivos revocable trusts but I don’t see how this would benefit your brother then there’s always that tacky “death thing”.

AnnAnderson1015 · Joined: 30 Mar 2009 Posts: 46

It would not be possible for you to buy it as an LLC, you can closed on the property and deed it into a LLC afterwards. This is commonly done for estate planning purposes.